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    December 2023 Review

    Corporate Profit Warnings On the Rise – December 2023 saw a rise in the number of profit warning announcements issued by listed firms. Kakuzi Plc, Express Kenya and Sanlam Plc project at least a 25% decline in net earnings in financial year 2023. The underlying reasons cited for this expected decline are adverse economic challenges, including rising input costs, lower consumer demand and rising finance costs.

    Economic Growth Picked Up in Q3’23 – The Kenya National Bureau of Statistics in its Q3’23 GDP Growth Report estimates that growth accelerated to 5.9% compared to 4.3% recorded in Q3’22. The performance was mainly driven by strong growth in accommodation and food service activities (+26.00%), financial and insurance (+14.7%), information and communication (+7.3%) and agriculture (+6.7%). Electricity sector however, contracted by 1.9% while growth in transport and storage activities decelerated to 2.8% on account of rising energy costs.

    Acorn Project II Medium Term Note Early Redemption - During the month, Acorn Holdings issued a notice of an early repayment of its Notes valued at KES 573.4Mn in relation to Project 2 (USIU 4, Linden Properties LLP). The notes will be redeemed at an amount equal to the nominal value of the notes, together with accrued but unpaid interest from the preceding Interest Payment Date up to and including the Early Redemption Date on 5th January 2024.

    Local Pump Prices Marginally Decrease – EPRA released new fuel prices for the December’23-January’24 pricing cycle. Petrol currently retails at KES 212.36/litre (KES -5.00), Diesel at KES 201.47/litre (KES -2.00) and Kerosene at KES 199.05/litre (KES -4.01). The decline in fuel prices came on account of a notable decline in landing costs–supported by a sizeable decline in oil prices across international markets. The regulator noted that the government opted to cross-subsidize the price of diesel with that of petrol to further cushion the economy.

    Inflation Continued to Cool Off - Headline inflation decelerated to 6.6% in December 2023, down from 6.8% recorded in November 2023 on account of a considerable deceleration in fuel inflation. Fuel inflation decelerated by an impressive 180bps to 13.7% in December 2023 from 15.5% a month prior. Food inflation increased by 10bps to 7.7% from 7.6% in November 2023 on account of increased seasonal demand. Core inflation (Non-Food-Non-Fuel) however increased 10bps to 3.4% pointing to underlying price pressures. We expect headline inflation to oscillate within CBK’s upper bound target over the coming quarters.

    December MPC Meeting – The Central Bank of Kenya in its last Monetary Policy committee sitting in 2023 elected to raise the Central Bank Rate by 200bps to 12.5% from 10.5% to address exchange rates pressures and mitigate second round effects from soaring commodity prices. The committee also noted the acceleration in the banking sector’s non-performing loan ratio to 15.3% in October 2023 from 15.0% in August 2023 while private sector credit demand accelerated 20bps to 12.5% in October 2023, from 12.2% in September 2023.

    Shilling Continued Losing Streak Against USD - The Kenya shilling depreciated further against the USD to close at KES 156.46 versus KES 153.06 at the end of November. We observed a faster decline in the month of December (-2.2%) compared to November (-1.7%). We expect the volatility on the local currency to ease due to replenished balance of payments account, supported by stabilizing dollar inflows from diaspora remittances and key export-earning sectors.


    December 2023 Equities Market Performance

    During the month of December, the indicative indices recorded a mixed trend with NASI increasing by 0.2%, NSE-20 increasing by 0.3% and NSE-10 decreasing by 0.5%. Foreigners remained net sellers taking the selling position to KES 1.35Bn taking the YTD net selling position to KES 12.53Bn, lower than the KES 24.04Bn recorded in 2022.

    Equity turnover decreased 11.0% m/m to KES 3.28Bn from KES 3.69Bn in November while volumes traded also decreased 23.6% to KES 208.36Mn. Market capitalization was down 0.2% m/m to KES 1.44Tn. We expect market activity to remain above KES 3.00Bn/month in Q1’2024 owing to positive FY’23 net earnings results and dividend payment of some counters.

    Top Gainers: TPS Eastern Africa was the top gainer in December’23 jumping (+42.4%) m/m to KES 16.45 from KES 1.55. Home Afrika was the second largest gainer jumping (+27.59%) m/m to KES 0.37 from KES 0.29. Other gainers included : Eaagads (+18.2%) m/m to KES 13.95 from KES 11.80, KCB (+16.1%)m/m to KES 21.90 from KES 18.85 and E.A Cables (+9.0%) to KES 0.97 from KES 0.89.

    Top Losers: Eveready was the largest m/m decliner losing (-19.4%) to KES 1.08 from KES 1.34. Other top losers included : KenGen (-12.6%) m/m to KES 2.01 from KES 2.30, Sanlam (-11.8%) m/m to KES 6.00 from KES 6.80, Standard Group (-11.0%) m/m to KES 7.74 from KES 8.70 and Kapchorua Tea (-10.1%) m/m to KES 215.00 from KES 239.25 driven by the dividend book closure.


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    AIB-AXYS Africa Ltd is the fusion of two established companies; AIB Capital Limited and Apex Africa Capital Limited, both with over 25 years of experience in the Securities market. With the solid reputation and experience of the professional teams, we leverage talent and networks to better service businesses and investors looking to capitalize on the African growth story, and its vibrant financial sector.
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